Correlation Between Spirent Communications and Sunstone Hotel
Can any of the company-specific risk be diversified away by investing in both Spirent Communications and Sunstone Hotel at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Spirent Communications and Sunstone Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spirent Communications plc and Sunstone Hotel Investors, you can compare the effects of market volatilities on Spirent Communications and Sunstone Hotel and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Spirent Communications with a short position of Sunstone Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirent Communications and Sunstone Hotel.
Diversification Opportunities for Spirent Communications and Sunstone Hotel
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Spirent and Sunstone is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Spirent Communications plc and Sunstone Hotel Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunstone Hotel Investors and Spirent Communications is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Spirent Communications plc are associated (or correlated) with Sunstone Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunstone Hotel Investors has no effect on the direction of Spirent Communications i.e., Spirent Communications and Sunstone Hotel go up and down completely randomly.
Pair Corralation between Spirent Communications and Sunstone Hotel
Assuming the 90 days horizon Spirent Communications plc is expected to under-perform the Sunstone Hotel. In addition to that, Spirent Communications is 2.78 times more volatile than Sunstone Hotel Investors. It trades about -0.08 of its total potential returns per unit of risk. Sunstone Hotel Investors is currently generating about 0.14 per unit of volatility. If you would invest 1,151 in Sunstone Hotel Investors on October 12, 2024 and sell it today you would earn a total of 19.00 from holding Sunstone Hotel Investors or generate 1.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spirent Communications plc vs. Sunstone Hotel Investors
Performance |
| Timeline |
| Spirent Communications |
| Sunstone Hotel Investors |
Spirent Communications and Sunstone Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spirent Communications and Sunstone Hotel
The main advantage of trading using opposite Spirent Communications and Sunstone Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirent Communications position performs unexpectedly, Sunstone Hotel can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Sunstone Hotel will offset losses from the drop in Sunstone Hotel's long position.| Spirent Communications vs. MEDICAL FACILITIES NEW | Spirent Communications vs. GLOBUS MEDICAL A | Spirent Communications vs. Eidesvik Offshore ASA | Spirent Communications vs. MeVis Medical Solutions |
| Sunstone Hotel vs. The Home Depot | Sunstone Hotel vs. FRACTAL GAMING GROUP | Sunstone Hotel vs. GAMESTOP | Sunstone Hotel vs. Media and Games |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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